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Enter income, expenses, and property value to calculate the capitalization rate. Best for evaluating and comparing properties.
Income
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Annual Operating Expenses
Expense entry mode
All fields are annual figures. Simple total field is not applied.
Often 6–10% of gross rents for residential
Property Value
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Return on acquisition cost. Use when evaluating a deal before buying.
Acquisition cost only — no financing
Today's estimated value — use for refi or comparison
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Cap rate estimates a property's unlevered income yield by comparing annual Net Operating Income with property value. It is commonly used to compare income-producing properties before financing, taxes, appreciation, and investor-specific assumptions are added.
This calculator supports cap rate, implied property value, and required NOI workflows. Results are intended for screening and underwriting support, not as a standalone investment decision or formal valuation.
Indiana Cap Rate Calculator: What Investors Need to Know
This calculator estimates cap rate — the ratio of Net Operating Income to property value — for Indiana investment properties. Indiana has a 3.05% flat state income tax, which improves after-tax returns, but property taxes run ~2% for investment property (no homestead exemption), and insurance averages $1,800/yr due to hail, wind, and flood risk. These expenses directly reduce NOI and compress cap rates.
The calculator pre-fills Indiana defaults: 8% vacancy, $1,800 insurance, and auto-calculates property tax at 2% of purchase price when you enter a value. Three modes are available: estimate cap rate from NOI, find implied value at a target cap rate, or determine the NOI needed to justify an asking price.
Cap rate measures unlevered yield only. It does not include mortgage payments, appreciation, or tax benefits. For full deal analysis, pair cap rate with DSCR, cash-on-cash return, and the Indiana Rental Property Calculator.
Indiana-Specific Factors That Affect Cap Rate
Property Tax (~2% for Investment Property)
Indiana has a 3.05% flat state income tax but has moderate property taxes. The effective rate per Tax Foundation is 0.85% statewide, varying by county from 0.9% to 2.17%. On a $225K property, that is roughly $3,400/yr — a significant NOI drag.
Insurance ($1,800/yr Average)
Indiana insurance costs are below the national average at approximately $1,800/yr. Tornado and hail risk in central Indiana can increase premiums. The Indiana Department of Insurance oversees rate regulation. Properties in FEMA flood zones along the Wabash, White, or Ohio rivers may need separate flood insurance, adding $400-$1,200/yr.
Vacancy (8% Statewide Average)
FRED data shows Indiana rental vacancy at 5.5% statewide (2025). Indianapolis runs 5-6%, Fort Wayne tighter at 4-5%, college towns like Bloomington see seasonal variation 5-8%. For SFR underwriting, 6% is a conservative baseline. Rural areas can reach 8-10%.
State Income Tax (3.05%)
Cap rate itself is a pre-tax metric, so Indiana's 3.05% flat income tax is moderate. It does not affect cap rate (a pre-tax metric) but does reduce after-tax cash flow compared to no-tax states like Texas or Florida.
No Transfer Tax
Indiana does not charge a real estate transfer tax. This lowers acquisition costs by $1,000-$5,000 compared to states like Florida ($0.70/$100) or New York (0.4%-2.9%). Lower acquisition cost does not change cap rate, but it reduces your total cash invested and improves cash-on-cash return.
Indiana Cap Rate Benchmarks by Metro (2026)
These ranges reflect SFR and small multifamily (2-4 units) based on Zillow, Redfin, and Indiana REALTORS data. Actual cap rates depend on property condition, location within the metro, and expense assumptions.
| Metro | Median Price | Median Rent | Cap Rate Range | Insurance Avg |
|---|---|---|---|---|
| Indianapolis | $185K | $1,450/mo | 6.5-8.0% | $1,800 |
| Fort Wayne | $145K | $1,100/mo | 6.0-7.5% | $1,700 |
| Evansville | $140K | $1,050/mo | 6.0-7.0% | $1,600 |
| South Bend | $130K | $1,000/mo | 6.5-8.5% | $1,500 |
Sources: Zillow ZHVI/ZORI, Redfin median sale data, Indiana REALTORS Market Statistics (Q2 2026). Cap rates modeled with 8% vacancy, 9% PM, 1% maintenance.
Worked Example: Fort Wayne Fourplex ($240K)
A 4-unit property in Fort Wayne's Oxford neighborhood, listed at $240,000. Each unit rents for $850/mo. Here is the full NOI breakdown using Indiana defaults.
| Gross Rental Income | $40,800/yr | $850 × 4 × 12 |
| Vacancy (8%) | -$3,264 | IN avg |
| Effective Gross Income | $37,536 | |
| Property Tax (0.85%) | -$2,040 | $240K × 0.85% |
| Insurance | -$2,400 | 4-unit higher than SFR |
| Property Management (9%) | -$3,378 | 9% of EGI |
| Maintenance (1%) | -$2,400 | $240K × 1% |
| Total Expenses | -$10,218 | |
| NOI | $27,318 | |
| Cap Rate | 11.38% | $27,318 / $240,000 |
A 11.38% cap rate in Fort Wayne falls in the upper half of the metro range. The fourplex format helps because rent scales faster than expenses — insurance and tax are per-property, not per-unit. For comparison, a single $185K SFR in Bloomington renting at $1,400/mo would cap at roughly 6.5%.
Worked Example: Indianapolis SFR ($185K)
A 3BR/2BA single-family in Indianapolis's Southside, listed at $185,000 with market rent of $1,450/mo.
| Gross Rental Income | $21,600/yr | $1,800 × 12 |
| Vacancy (8%) | -$1,728 | |
| EGI | $19,872 | |
| Property Tax (0.85%) | -$5,700 | |
| Insurance | -$1,800 | IN statewide average |
| PM (9%) + Maint (1%) | -$4,639 | |
| Cap Rate | 6.53% | NOI $7,733 / $185K |
Indianapolis offers the best rent-to-price ratio among major Indiana metros. At $1,450 rent on $185K (0.78% monthly ratio), it clears the floor for positive cash flow with conventional financing. Compare this with Evansville where the same $185K buys a property renting for $1,050-$1,200 — yielding a cap rate below 4%.
Indiana Cap Rate FAQ
What is a good cap rate in Indiana for 2026?
How does Indiana property tax affect cap rate?
Why are Evansville cap rates lower than Fort Wayne?
Does Indiana no-income-tax benefit show up in cap rate?
Should I budget for flood insurance in Indiana cap rate analysis?
What vacancy rate should I use for Indiana cap rate?
How do I compare cap rates between Indiana metros?
Sources
- Tax Foundation — Indiana effective property tax rates (taxfoundation.org)
- Indiana Department of Insurance — Insurance premium data (insurance.indiana.gov)
- Federal Reserve FRED — Indiana rental vacancy rate (fred.stlouisfed.org)
- Zillow Research — ZHVI and ZORI median values by metro
- Indiana REALTORS — Market Statistics Q2 2026